By Subrata Majumder
Deep concern swirled around for India’s exports in the wake of US President Donald Trump’s tariff weaponization. The USA is the biggest destination for India’s export. It account for about one-fifth of India’s global export. Analysts fear that high tariffs by the USA will slash India’s overall exports, leveraging a drop in the GDP.
Nonetheless, the situation has turned into a paradox. Against the paranoia of containment, India’s exports surged despite Trump’s threat of high tariffs, which is the highest in the Asian market. The spike in the tariffs on India is mainly due to a retaliatory tariff of 25 percent for importing oil from Russia, in addition to a reciprocal tariff of 25 percent.
During the first 6 months of 2025-26 (April-September), India’s exports to USA increased by 13.4 percent, corresponding to an increase by 5.7 percent during same period in the preceding year.
In contrast, China’s exports to the USA tightened. In the first 8 months of 2025 (January-August), China’s exports to the USA dropped by 15.5 percent. The USA slipped to 3rd rank in China’s export list, behind ASEAN and EU, even though the USA is largest trading partner of China. In other words, China diversified its exports to emerging markets, particularly to ASEAN, India, Africa, as well to EU. Trade with ASEAN increased by 8.6 percent in January-August 2025, with Vietnam, Thailand and Indonesia as the prominent destinations.
How has India built up strong resilience to Trump’s high tariff weaponization?
One of the distinguished features for India’s strong resilience to Trump’s tariff backlash was the fall in Chinese exports to the USA. The downturn in Chinese exports to the USA offered a space to India to capitalize on the market vacated by China.
Notably, India emerged as a tough competitor to China in the export of electronic goods to the USA. There has been a boom in the growth of electronic goods to the USA from India for the last 3 years. Electronic goods emerged the biggest item in the export basket to the USA in 2024-25, accounting for 17.8 percent of total export to the USA. The average growth in India’s export of electronic goods to the USA recorded a 72.8 percent/year during the last 3 years. Hitherto, drugs and pharmaceuticals, diamonds and jewelry and petroleum refinery products were the major items in the export basket to the USA.
This demonstrates a dramatic change in the export basket of India to the USA. India challenged China’s behemoth stake in the US electronic market during Trump’s tariff war period and evoked a new era in the global order supply chain.
US imports from China have dropped significantly since the start of Trump’s second period of presidency. This impacted China’s export of electronic goods to the USA, with monthly exports of electronic goods from China plunging from US$3.4 billion in May 2024 to US$1.1 billion in May 2025, even though they were exempted from thereciprocal tariff. The consistent month-to-month decline in exports allowed India to capitalize on China’s lost market in USA.
Eventually, in pursuance of the steep fall in Chinese exports of electronic goods to the USA, India’s exports surged in the USA market. During first six months of 2025-26 (April-September), India’s export of electronic goods to the USA shot up by 132 percent.
The growth trajectory of India’s electronic export to the USA relies on the boom of the Indian electronic industry. The present Indian electronic industry is valued at about US$155 billion. This is a six-fold increase in the electronic goods industry during the last decade. Eventually, this led to a five-fold increase in exports of electronic goods in the decade – from US$7.1 billion in 2014-15 to US$40.9 billion in 2024-25.
According to a PWC report, India’s electronic manufacturing industry will reach US$282 billion by 2030, nearly double the current level. The growth will be driven by mobile phones and wearable, semiconductor and consumer electronics. PLI (Productivity Linked Incentive) and other peripheral incentives have been crucial for boosting manufacturing and attracting investment.
FDI (Foreign Direct Investment) played key role in the development of electronic industry, with a significant impact on exports. India has attracted FDI worth US$4 billion since 2020-21. The trigger in FDI in the electronics sector was catapulted by the “China+1” strategy.
Given the “China+1” strategy, India became a fovoured nation for foreign investors. As a result of the new and innovative government policy to attract foreign investors, like the PLI scheme and coupled with low labour costs, India emerged as an important destination for foreign investors. The windfall flagged India as an emerging hot destination for the manufacture of electronic goods. Foreign investment in manufacturing of electronic goods sparked to a 193.6 percent increase in 2024-25, against average growth of 25 percent in the preceding years. Eventually, the global electronic leaders like Apple, Samsung and Foxconn flocked to India and emerged as the major exporters of electronic goods to the USA.
To this end, it would not be overoptimistic to underscore India as the next generation supply chain hub.
Subrata Majumder is a former adviser to Japan External Trade Organization (JETRO), New Delhi, and the author of “Exporting to Japan,” as well as various articles in Indian media, including Business Line, Echo of India, Indian Press Agency, and foreign media, such as Asia Times online and Eurasia Review
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